Questions, answers on federal sequester

WASHINGTON — Federal employees and agencies — as well as federal contractors and their employees — are in hurry-up-and-wait mode on sequestration, the threat of automatic cuts in many federal programs.

It’s still to be determined whether those cuts will happen starting in March, whether they will be delayed again as President Barack Obama has proposed, or whether they will be called off entirely. But even with that uncertainty, some belts already are being tightened.

Below are questions and answers about what’s happening:

Q. What steps involving federal employees have agencies taken already?

A. The Defense Department, the largest federal department, has taken the lead in disclosing its plans, ordering a civilian hiring freeze in its components with just a few exceptions, and cuts in expenses such as conferences, travel and training for its employees.

The Office of Management and Budget meanwhile has prepared similar government-wide guidance telling agencies to scrutinize costs such as travel, training, facilities, and supplies.

Both the Pentagon and OMB have raised the possibility of furloughing employees if sequestration happens.

Q. Doesn’t the government have a lot of temporary employees? Are they being laid off?

A. Through September 2012, the executive branch — outside the U.S Postal Service, which is self-funding and not threatened by sequestration — employed 1,942,528 permanent employees and 167,675 temporary employees, according to Office of Personnel Management data.

For purposes of that count, “temporary” includes certain specialty categories such as employees hired for a limited time, called term employees.

The Defense Department has raised the prospect of laying off temporary employees but the impact to date is uncertain.

For example, in the Air Force, commands “are currently reviewing temporary and term employees to determine which of those positions are mission critical,” a spokeswoman said in an email. “We’ve … started the ongoing process to terminate some temporary and term employees. At this point in the process, we don’t have specific information on how many positions will be terminated.”

Similarly, a Marine Corps spokesman said in an email: “The Marine Corps, as of now, has not issued guidance to commands to release term employees prior to expiration of their term. However, the looming threat of sequestration and/or a year-long continuing resolution could create a budget shortfall where we would have to enact belt-tightening measures. There remains much uncertainty at the moment.”

An Air Force planning document, first reported by the Air Force Times on Wednesday, estimates the loss of temporary and term employees at up to 3,200. Similarly, a Navy memo estimated the loss of 3,000 positions at shipyards by laying off temporary employees and maintaining its civilian hiring freeze.

Q. What’s the latest on possible unpaid furloughs?

A. The OMB guidance says that agencies may “have to consider placing employees on temporary furlough, or taking other personnel actions, should sequestration occur.”

It would be up to individual agencies to decide whether they need to furlough employees and if so, when and for how many days. Agencies would look for savings elsewhere – including in grants, contracts and other expenses – but salaries are a big part of the overhead accounts that would be hit by sequestration. In addition, some agencies are more labor-intensive than others.

Again, the Defense Department has been the most transparent, with both the Army and Navy telling their components to prepare for the possibility of furloughing nearly all their employees by one day a week, starting around April 16.

Q. If a sequester would hit in early March, why would furloughs be delayed into April?

A. Federal personnel policies guarantee that employees who will be furloughed must receive 30 days of notice. In addition, where employees are represented by unions, certain bargaining rights apply. These rights, which the various memos have said will be honored, include negotiating over the timing of furloughs.

Q. What can federal employees do to prepare themselves for a possible furlough?

A. First, one thing that won’t help: saving up paid vacation time with the idea of taking it on furlough days and continuing to be paid. An employee “may not substitute paid leave or other forms of paid time off for any hours or days designated as furlough time off,” according to OPM.

However, it could be wise to cut back on spending now, or at least decide what to do when the time comes. The unpaid time off could be a significant hardship for many.

“Federal employees cannot afford to lose 20 percent of their pay, which is what the one day per week furloughs currently being threatened would mean,” Jacque Simon, public policy director of the American Federation of Government Employees, said in an email.

“Consider the take home pay (after tax, health insurance, etc.) of a federal corrections officer, about $500 a week, and cut that by 20 percent or $100,” Simon said. “Chances are that the officer won’t be able to afford rent and a car payment, let alone saving for retirement in the &frac18;Thrift Savings Plan€ or paying steep health insurance premiums.”

Q. What about making up for the lost income?

A. Furloughed employees will not be entitled to severance pay, since they are not being separated from their jobs, but rather put on leave without pay. In some circumstances they may be eligible for unemployment compensation; policies vary by state. Employees also might be able to take outside employment, although numerous restrictions would apply.

There’s no expectation that employees who would be put on furlough would be paid later for that time. Past furlough situations where employees were reimbursed for that time involved temporary lapses of agency funding authority, not situations where agencies need to save on current expenses.

Q. Will all federal employees face 22 days of furlough?

A. Not necessarily. According to Office of Personnel Management guidance, a furlough “will impact each agency differently depending on the extent of the agency’s budget reduction.”

The 22 day figure is only being raised as a possibility in parts of the Defense Department, at least for now. Other agencies could need fewer, and potentially even none.

However, a furlough of more than 22 days in a year would mean certain additional rights would apply, including a longer notice period.

Q. If the sequester is delayed, would it come at the cost of federal employees in some other way?

A. There are many possibilities. The last such delay, from January to March last year, prompted a series of budget cuts and assumptions about raising tax revenues by authorizing retirement savings plans, including the TSP, to allow participants to change the tax status of their investments at the cost of paying a tax up front.

Various proposals have been circulated, including one featuring a mix of spending cuts and revenue increases and another endorsing the recommendations of the Simpson-Bowles Commission. However, the House leadership recently refused to call the former up for a vote, and full House rejected the latter as part of a budget-related bill.

A Republican proposal introduced in Congress Wednesday calls for cutting the federal workforce by 10 percent by attrition, filling only one of every three vacancies that occur. Another idea that has been considered would apply a reduced inflation adjustment to various benefit programs, including Social Security, veterans benefits and federal retirement annuities.

Q. Is the pain being shared by government contractors?

A. In anticipation of a sequester, agencies have delayed awarding some contracts that were due for renewal and have cut back on the scope of work in others, said Alan Chvotkin, executive vice president and counsel for the Professional Services Council, a trade association of government contractors who provide information technology, systems engineering, logistics support and similar services.

Plans announced by the Defense Department to cut back on depot level maintenance, modernizing facilities and general operating expenses further will impact contractors, who perform much of that work, he added.

“They’re not hiring except for existing revenue-generating contracts,” Chvotkin said. “They’re not opening new offices. They’re basically trying to hang on to what they have.”

Chvotkin said the association has no count of job losses in the contracting community due to the sequestration threat. But the group says that “tens of thousands” of contractor positions already have been eliminated as government spending on service-type contracts has fallen from $340 billion in 2009 to $325 billion in 2011.

Q. What would be the impact of delaying the sequester?

A. That would depend on how the law is changed. If the required savings are not rescinded but rather are only pushed off until later in the budget year, agencies would have to cut even more deeply.

For example, it already is getting late in the budget year to use buyout incentive payments, since the up-front costs of making those payments would partly offset the savings of employees taking them and leaving the payroll.

“At some point you run out of reasonable options to implement whatever policy you decide,” Chvotkin said. “We’ve already seen the effects of austerity because of the reductions in spending and services. At some point the preparatory work for sequestration is going to look exactly like sequestration.”